China Resources Beverage plans to raise more than $600m from a listing in Hong Kong as the soft drinks maker kicked off its IPO.

The offer began yesterday (15 October) for the issuance of about 347.8m shares with a target capital raise of HK$4.73bn ($608m) based on the mid-point of the HK$13.50 to HK$14.50 pricing range.

China Resources Beverage, or CR Beverage, said in a filing with the Hong Kong Stock Exchange that it aims to complete the listing and begin trading on 23 October.

CR Beverage, which is part of the wider China Resources Holdings, or China Resources Group, claims to be the second-largest producer in China of packaged drinking water and the largest in the purified category.

It owns the C’estbon and L’eau water brands but is also present in other soft drinks. The company’s portfolio includes the Zhi Ben Qing Run herbal tea line, along with Mi Shui juices and Mulene sports drinks.

Proceeds from the IPO will be used to expand production capacity and sales channels, for marketing activities and R&D, as well as for general working capital purposes. Around HK$378m will be put aside for “potential” M&A.

Hong Kong-headquartered China Resources Group (CR Group) is a state-owned enterprise and is one of the controlling shareholders in CR Beverage.
Other business units within the parent group also have listings in Hong Kong, including CR Beer, along with its power and land assets.

Revenues and profits for CR Beverage increased in the year to 31 December.

The company reported revenue of 13.5bn yuan ($1.9bn), up around 7% from the previous 12 months.

Gross profit rose almost 15% to 6bn yuan and net profit climbed 31% to 1.3bn yuan.

Packaged drinking water is the largest revenue earner for CR Beverage, accounting for around 92% of the business total at 12.4bn yuan last year, up from 11.9bn yuan in the corresponding period.

The company operates 13 manufacturing plants in China and a further 31 factories operated with partners, according to the IPO filing.